44) In the short run, the monopolistic competitor is just like the perfect competitor in that
A) equilibrium is determined by setting price equal to marginal cost.
B) either type of firm can earn economic profits, experience economic losses, or break even in
the short run.
C) each equates marginal revenue and marginal cost in order to maximize profits, with the
result that price exceeds marginal revenue.
D) new firms enter in the short run when firms are making profits.
45) If firms in a monopolistically competitive industry experience short run losses,
A) some firms would like to exit the industry but find they cannot.
B) firms increase prices further, until they make at least a normal return.
C) firms increase advertising spending to increase demand, until they make at least a normal
return.
D) some firms exit the industry, causing the demand curves for the remaining firms to shift to
the right until they earn a normal profit.
46) If monopolistically competitive firms earn short run economic profits, we expect to see
A) new firms enter the industry, which shifts the demand curves of the existing firms to the
left until firms earn zero economic profits.
B) new firms trying to enter the industry, but unable to do so because of barriers to entry.
C) existing firms altering their scale of plant to try to capture larger profits. The combined
effect is to cause all firms to earn zero economic profits.
D) existing firms increasing prices to try to capture larger economic profits.
47) A monopolistic competitor is like a competitive firm in the long run, because
A) it earns positive economic profits.
B) it earns zero economic profits
C)
oth firms will earn positive economic profits.
D)
oth firms will increase price to increase profits.